Pension fund officials are currently in the process of investigating how HERS should invest in venture capital and whether it should continue to invest in the asset class, he said.

"We've been invested in venture capital a long time and … we have not been that successful," Mr. Chattergy said. The pension fund has $335 million, or about 2%, of its $15.4 billion total asset invested in venture capital.

In May, the pension fund held an educational session for the board, featuring an executive from an endowment, one of the pension fund's general partners, and one of its venture capital fund-of-funds general partners, he explained. The discussion revolved around the challenges for a public pension fund to do well in venture capital. At some point, staff will seek board direction on how it should proceed.

In the meantime, the pension fund's staff will be investigating everything from withdrawing from venture capital to setting up an office in Silicon Valley to be closer to the action, he added.

If it leaves venture capital investing, Hawaii would be following in the footsteps of the California Public Employees' Retirement System, Sacramento, which stopped investing in the asset class about seven years ago, said Megan White, a spokeswoman. The $331.6 billion pension fund still has about $982 million in venture capital.

"I'd say the biggest factors were it wasn't preforming well for us, the risk is high, and we will only work with the top external managers, plus we require a lot of transparency from them," Ms. White wrote in an email. "All of those things together make VC not well-suited for our portfolio."